Celebrating 3 Years of Million Dollar Journey: Day 2

As I mentioned yesterday, this anniversary giveaway is bigger than ever. So big, in fact, that I had to separate the prizes into 2 separate posts.

Lets continue with the giveaway madness!

Computer LCD Monitor (22″)

When I contacted Questrade to see if they were interested in sponsoring a prize, they were very generous in their response. They wanted to giveaway something that would improve trading, so what’s better than increasing LCD screen real estate.

What is Questrade? They are among Canada’s lowest cost discount brokerages. They offer $4.95 commissions per trade for up to 495 shares and $0.01/share after that up to a maximum commission of $9.95/trade. Not only do they offer low prices, they have a wide variety of account offerings. RRSP, USD RRSP, TFSA, Non-Registered, and RESP (among others). All of this with no annual fee or minimum balance.

If you are interested in opening an account with Questrade, make sure to use my coupon code for a $50 trading credit.

So what’s the prize? The lucky winner will receive a brand new 22″ LCD Monitor courtesy of Questrade. This may be used to replace your existing monitor, or perhaps as part of a dual monitor setup if your video card supports it.

Moonjar “Family” Package

Last year, I did a review and giveaway of the Moonjar. The Moonjar is a new age piggy bank that can help teach children about money by separating spending, saving, and sharing money. With the popularity of the previous Moonjar giveaway, the Canadian Moonjar distributor has offered the Moonjar Family Package to Million Dollar Journey readers.

What’s included in the Moonjar Family Package?

Standard Moonjar (x2) – You can read more about it in my Moonjar Review.

Conversation to Go Money game – Put the curious conversation about money on the table with these 100 open-ended questions. Share your dreams, lend your thoughts. An experience for the whole family.

Noom & Raj Start a Business (Hardcover) – Meet Noom and Raj (that’s Moon and Jar backwards!). They want to start a business – a lemonade stand. Follow them through this fun adventure where they learn all about money words – Saving, Spending and Sharing with their Moonjar.

The Leader Lesson Plan – This 45-minute lesson plan gives teachers, parents or community members the tools to teach kids about money and Moonjar. Fun and educational, this tool makes money management accessible and entertaining for everyone.

In addition to the generous gift, Moonjar Canada is offering Million Dollar Journey readers an exclusive discount for a limited time. You can save 15% up to Dec. 24, 2009 using code “SHARE15” on www.moonjar.ca.

How to Enter:

In this giveaway, you can increase your chances of winning by obtaining multiple entries.

Tell me about your best personal finance or investing tip in the comments (doesn’t have to be original). (+1 Entry)

About the author: FT is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

Pay cash for big ticket items where you can get a deal. I love to say “all I have is this amount in cash, so I can’t afford this because of the tax”. I usually walk with the item with a discount equivalent of the tax. Works most times. Invest the savings and you end up being ahead of the game.

Bank any “new” money. If you get a raise or a bonus or some kind of windfall, instead of blowing it all, bank a lot of it (in my case all of it). I already live well enough to do fun things, no need to buy something just cause i have more money!

We put everything on our credit card so we have a good idea of our spending and delay the cost by up to 30 days which saves interest on the mortgage. Use the Manulife One account, all paycheques to pay down mortgage, then spending slowly eats away paycheque but interest saved in the meantime. All additional funds stay on mortgage. Start work later in the morning so save costs on before school care, much more relaxed morning and time spent with kids, spouse gets off earlier and starts dinner, works well to help (although not solve) the work/life balance issues.

Have patience when investing. I bought some stocks last January and then saw them go even lower. Now they are all on the positive side. If I had sold when they went down I would have lost a lot of money. Staying patient has paid off.

I use credit cards to buy everything but your post on the best cash back cards has made me re-think the card(s) I will use in the future. My tip: during negotiations for your mortgage make sure to look for extras like no fee secured line of credit, no service charges on your bank accounts for x number of years, no charge for the bank’s gold card for x number of years, etc.

When my daughter was born, I decided that the $30 the govt was giving me for a child tax credit (baby bonus back then) was just going to stay in the account and be invested for her (unless we really needed it) It became the education account and as the amounts grew (I have 3 kids) I used it to pay for orthodontie, or other special things for them plus put away a good amount for their education (REEE, savings accounts and Drips).

My best tip is to use a HELOC as your main chequing account. You save on fees and every dollar you deposit saves you interest. Make sure you’re always in the “red” by pre-paying your mortgage when you’re close to even. The interest saved on your mortgage is higher than what you would have earned in a savings account and you don’t need to pay taxes on the extra income.

Do all your grocery shopping on the first Tuesday of each month at Save-On-Foods, and save 15% off your entire purchase of $50 or more. Combined with sale prices, I sometimes save up to $100 off my bill. Not available in all cities.

Also, buy bulk whenever practical. Costco can save you money if you’re careful to only buy things you need!

I read a comment on a frugality post on Ask Metafilter the other day that made me laugh and laugh, so I offer it up:

1) Don’t waste money buying expensive binoculars. Simply stand closer to the object you wish to view.
2) If you smoke, save on matches and lighters, by simply lighting your next cigarette from the butt of your last one.
3) Old telephone directories make ideal alternatives to expensive personal address books. Simply cross out the names and address of people you don’t know.
4) Save petrol by pushing your car to your destination. Invariably passers-by will think you’ve broken down and help.

Just last weekend, I set my daughter up with 3 empty mason jars in her room – one for giving, one for saving, and one for spending. Interesting to read about the moon jar (I hadn’t heard of it before), although if I had known about it I probably would have gone with the mason jars anyway :)

This is a good first step… anybody have any good resources on next steps to take to teach your kids about money?

I recycle all of my bottles and cans for a cash refund several times a year. I then match the total I get back and donate that money to PETA or the Humane Society. I make the donation with my visa and pay it off the same day with my bottle money. The beauty of it is that first and foremost I’m helping a good cause, secondly I generate about $600 – $800 a year in tax deductions from the donations and last but not least… by donating on the credit card I get the rewards points. Beauty-ful!!!!!

The 1% investing rule. When I started investing, the market was in a free-fall and I was scared to put anything over $1,000 in the market. Then, after following your investing tips, I found out about 1% rule and it definitely helps a lot!

We retired early (56/58) and are living on govt pensions which are adequate although reduced . We figured the extra time away from the stress of the hospital and teaching would help our health in the long run.. We sold the house,built a smaller one outsided of the city, kept one car only, tossed the mutual funds and now have index funds for RRSP’s Severence $ stay in a emergency cash fund.. All our expenses are paid on one credit card that gets paid off every month and we get the Canadian Tire money too. So far we have still been able to travel and now have the time and health to enjoy life and family. No mortgage or credit card debt makes the difference.

If you choose to implement a passive investing scheme where you contribute regularly to a discount trading account, follow these steps:
1. Choose your asset allocation scheme (what % in each sector).
2. For each sector, choose the lowest cost fund that tracks your target index. Hopefully it is a well established fund with lots of assets under management so that it won’t disappear on you.
3. Choose a cash threshold at which you’ll make a trade, to keep costs of the trade balanced with the cash drag your portfolio will experience. For me, I chose 100x my trade fee, so that the trade fee would essentially be a 1% front end load.
4. Once your contributions reach your cash threshold, buy the most underweighted security according to your asset allocation scheme.

By following this approach, you’ll keep costs reasonable and keep your portfolio reasonably balanced. You’ll have lots of time to ponder thresholds for when you should rebalance, but generally rebalancing should be avoided unless you are out of balance by an amount >= your cash trade threshold.

Personally, I look at the interest rate for all debts to determine which one should be paid off first. Obviously credit card should be first. What is often not clear are the debt with tax breaks. Do the math to calculate what’s the real interest rate when tax breaks are accounted for. You’ll be surprised to find that sometimes the tax breaks are just not worth it.

Some cashback credit cards give you different levels of cash back depending on where you make the purchase. For instance, the MBNA Smart Cash Mastercard gives you 3% cash back if you spend at a grocery store, drugstore or gas station, and 1% cash back for everywhere else.

Want to earn 3% cash back at a store where MBNA only gives you 1%? Many big store chains sell gift cards through grocery stores, drugstores and gas stations. You can buy gift cards to many home improvement stores, restaurants, theatres, you name it. As long as the point of purchase is done at designated grocery store, drugstore or gas station, you’ll get the 3% back!

So don’t buy a Home Depot gift card at Home Depot. Buy it at Esso or Petro-Canada and reap the bigger rebate! You’ll get gas points, too!

Always look at the MER (management expense ratio) of any mutual fund or ETF (exchange traded fund) you are going to purchase as if this is too high, it might eat away at your future growth of the stock.

1. Spend less than you earn
2. Use credit cards responsibly; pay off the balance every month (Treat it like a debit card). As a bonus, you could be “making money” from reward cards.
3. Distinguish between “needs” and “wants”
4. Form a budget! Track income & expenses. Have financial goals (short and long term). Use this information to guide and adjust your budget. It is not set in stone.
5. Save! Save! Save!

Switch to a whole foods diet. This pretty much eliminates eating out because most restaurants do not follow a whole food/ no preservatives rule and because you are cooking from scratch, alot of money is saved, not to mention the reduced impact on the enviroment. Our family of four puts out one small bag of trash most weeks, due to the fact that we don’t but very many prepackaged foods, maybe one or two items a week will come from a box or can i.e. crackers or canned tomatoes. It is also better for your health and it is wonderful to be able to know exactly what goes into your food.

I use my avion card to purchase everything. I cycle money from my chequing account to pay off the visa for every transaction the day of the purchase. THis way I always have a clear picture of how much money we have left in our account for other expenses

If you have a business, invest some time learning about how to create a blog with online videos to market your business online. This will prove to be the most valuable investment in 2010…and a fairly inexpensive one.

When our kids starting working we agreed with them that they would put half there paycheck in a seperate savings account. They could do what ever they wanted with the other half, and the savings was for their future. As long as they kept saving there money, we would give as much help as possible for4 college or university.

If you have an allocation of US equities in your indexed ETF portfolio, but worried about effects of exchange rates vs. hedging costs of equivalent Canadian ETFs (e.g. VTI vs. XSP): consider using purchasing power parity (PPP) rate as a break-even point for this decision. PPP with USD is currently in range of 82-88 cents USD.

E.g., when CAD is above its PPP rate against USD, only buy USD denominated equivalent ETF (since USD is cheap); when CAD is below PPP – USD is expensive – buy the hedged equivalent. It’s an oversimplification of sorts, but it takes away the headache of trying to decide on hedged/non-hedged approach.

Find an investment strategy that works for your situation and stick with it. If your fundamentals are right, you should not have to change strategy. When the markets and your finances take a dive or skyrocket, stick to your strategy.

“Sometimes good enough is good enough”! You’ll never get anywhere if you spend all your time looking for the “perfect” investment/savings account/interest rate instead of doing anything. I used to be paralysed while I tried to find the “best” option, and ended up doing nothing. That didn’t advance my goals or pay down my debt! It was a hard lesson to learn, but doing something toward your financial future id better than doing nothing while you wait for the “best” to come along.

I track all my expenses (and have done so for over 30 years) giving me a very precise number as to where it when and what can be cut if required – very important for someone like me who is self employed with varying income streams.

Congratulations on 3 years!
I’ve been following your journey for about the past two. Keep up the great work!

Tip: If you could find a GIC offering a higher interest rate than what you could borrow for, make the investment! But pay off the debt from your pocket while the borrowed money sits in the GIC. This way, you don’t end up with a terrible credit score, and you make some change once the GIC is up!

Max RRSP and TFSA contributions every year – in a way I guess that’s paying myself first! Also, pay all credit card charges in full every month – you get all the advantages that come with your credit card, and no associated charges.

My tip is to simplify your life…buy less things, get rid of anything you don’t use, only get the cable channels you actually watch, avoid Tivo-guilt by not buying DVDs, games , books, etc that you won’t be able to get around to.

My tip: Always keep a cool head and optimize your money. For example, you may see a $75 jacket you REALLY want, but after stepping back, you may realize that if you’re going to spend $75, you’d rather have nice dinner and night out with your significant other.

My only tip is Start Right Now. No matter if it’s simply opening a savings account and setting some money aside for when something bad happens, or setting up a brokerage account to do self directed investing. Doing something today is always better than waiting.

My best personal finance tip is to read MDJ =P (seriously). Lot’s of great tips and discussions by readers, guest writers and, of course, FT, himself. It really broadens your perspective on personal finance and money in general. The fact that it has a Canadian perspective is also invaluable to fellow canucks.

Increase your automatic savings to coincide with the ending of a payment to something else; for example, I had my RRSP contribution via payroll deduction doubled on the first pay after my car was paid off — because of the timing, I never felt deprived even though so much more money was now going into RRSP’s – frankly, I never really noticed the increased payment to RRSP’s, I just noticed the extra money I had available each pay.

When buying/selling stocks. Be aware that it’s human nature to hold on to losers (stocks going down) for too long, because of overconfidence. It’s also human nature to sell stocks that’re going up too soon.

Tips:
1) Use President’s Choice Financial:
– no fee banking (chequing, savings)
– can do all banking online
– no-fee PC mastercard with points that are truly easy to redeem for free groceries right at the check-out

There are very few cases where personal banking in Canada makes sense anywhere else.

If you have the cahoonies, always ask for a discount … always. Just simply say, “Is that the best deal you can give me?” Even in retail stores, this works more often than you’d think.

You’ll be amazed at how many times a clerk in a store will say, “I guess I can give you 20% off …” or “Well we have this promotion going on …” or “Actually, this is going on sale next week …” or “I can throw in a ___ for free …”

Having reviewed some of the other comments, I would say that it’s helpful to marry someone who is _better_ than you in some way financially (i.e. saves more or spends less). While I’m the more thrifty one in the relationship, my husband is the better saver. He’s motivated me to do more retirement saving, make our savings plan automatic, and to strongly resist touching our savings. We found that the growing and changing was difficult at the beginning of our marriage, but now I’m so delighted that he encourages my thriftiness and has made me a much better saver!

A hard learned lesson I learned in trading stocks is to avoid buying a stock on a friends recommendation! Make sure you do your own due diligence and understand what you are getting into. I am a little wiser now but I am still a bag holder.

As with most things, success is more likely when you have a plan and know what you’re chasing after. Know what’s important to you (e.g. what kind of lifestyle now and in the future, how much security versus status, etc.) and with that knowledge and self-awareness identify your goals and plan your strategy. All the little tips to maximize this and minimize that don’t make a difference if you don’t use them in a way that achieves whatever is ultimately important to you.

Don’t buy stuff just for the sake of having it. Only buy what you absolutely need and try and wait as long as possible before buying it. Time Value of Money. If you car will last another 6 months, don’t buy it until you need it.

Pay off all consumer debt (credit cards, short term loans, etc.) asap and don’t continue to charge. Don’t do the buy now, pay later unless: 0% interest and you have the cash to pay it off in full before it comes due.

My best PF tip is to be really aware of the difference between wants and needs. If you truly just follow your needs, nearly any job/career (not min. wage though) will give you a surplus cash flow. Then either save or invest depending on your bent and all will be well.

Ensure you select a level of risk that you can truly live with – and then decide on an asset alllocation investment plan that reflects this risk. Ensure your investment plan fits within a comprehensive financial plan to achieve your financial goals over time.

This is post 251. If we assume everyone above is a unique poster, my odds at this point are 1 in 252. I can assume more people will post by the time the contest closes. It may double perhaps. So I my have odds of 1 in 500.

Even though this is a free entry, it’s important to understand your odds when involved in a ‘chance’ situation. It allows you to set reasonable expectations.

One of the best and easiest personal finance tips I like to share with friends and family is to get a VISA or Mastercard with a good rewards program (and preferably no annual fee) and use it for EVERYTHING, then pay it off monthly. Why use debit and cash when you can earn something back on your purchases for free??

I was having a hard time convincing my wife to budget, I had spreadsheets, charts, etc… didn’t impress her. Withdrew cash from the ATM put it in some jars told her we could only spend this amount…and VOILA!!! We are actually sticking to the budget now.

We have an account for our kids and the money the Canadian Government gives us for having kids (how great is that?) goes straight in there….we never miss it and it provides each year for a good start to an RESP.

I have a separate savings account for Christmas in which I have an automatic transfer set up to take from my chequing bi-weekly on my payday starting in January of each year. There is no need to be anxious when Christmas arrives as the money is there when the credit card bill arrives in January!

My best tip is to do something – anything – to take a step in the right direction. Set up a continuous savings plan, clip coupons, get cash envelopes, review your finances, make your own lunch, follow stocks, read books – as long as you continue to be interested and do something, you’re bound to learn and the more you learn, the better off your investing will be.

RESEARCH! and Compare Like Products! Nothing is ever as good as advertised – if the Marketers and PR personnel are doing their job ;) – and by shopping around, you might find something that better suits your needs.

Oh, and I also charge everything on my cash rebate CC, and pay the balance in full each month.

> finance or investing tip
Do not pay out mortgage or any other low rate long term debt if you can have higher rate of return for this money elsewhere.
You are unlikely to get a loan with such low rate anyway

One of my best personal financial tips is to put my spending into two categories of “needs” and “wants”. The “needs” are what you have to spend on and the “wants” are more luxury items. If my “needs” are filled first, then I can decide on a “want”. I never lose with this philosophy. Great Contest and Congratulations!